All About Pabst's Strategic Restructure

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FILED SEPTEMBER 12, 2016

Dear Client:

Last week a reader warned us that Pabst was about to "clean house."

Indeed Pabst has been doing some higher-level restructuring. The company communicated these revisions to their distributor network, who will now be on the receiving end of more attention.

While some of Pabst's direct selling roles have been eliminated, Pabst chief Eugene Kashper tells BBD, their overall headcount has continued to go up.

Eugene told BBD that they've strengthened their sales platform (people who sell their whole portfolio) by moving from 6 to 8 geographic divisions. They've moved some key talent into a critical Regional VP role to run those divisions.

Simultaneously, they right-sized their dedicated sales and marketing teams for certain brands, with top performers moving into "platform."

They've also increased the number of distributor-facing roles -- area sales managers or ASMs -- by 39%.

As for street-level selling, they will launch a revamped program with an initial focus on the Top 25 markets.

All of these steps will help them build on Tamarron results and address criticisms from the survey. The supplier moved up 3 spots this year.

As of January of this year, their headcount was up by 50% versus the prior January, when the current leadership team started. After this latest restructuring, their headcount will be up versus January 2016 as well, and it will be up around 60% from January 2015.

They grew net revenue more than 20% in 2015 while materially improving margins. Now they are looking at flat or low-singles net revenue growth in 2016, which is part of what precipitated these changes.

MORE ON STRATEGY AND MOTIVATION. What really happened, execs says, is that late last year and this year, Small Town's meteoric rise covered up the cracks Pabst had as an organization. They've since looked at things strategically and found they weren't going to market the optimal way, so they're moving to clean up some organizational layers.

But at least as important is covering and navigating the increasingly complex distributor network. They've had to let some people go, no doubt, sources tell BBD, but that was to prioritize those distributor-facing "ASM" or area sales manager roles.

So where the cuts or reshuffling has occurred are those direct selling roles - the regional sales managers. (There are still some out there, they've just been shuffled to major markets.)

This is all about focus on a higher level: See the aforementioned "critical" RVP role, tasked with full control of their slice of the business. The RVP level is a higher-level role for Pabst's primo-level talent.

Indeed Pabst has moved their key guys into these roles: For example, their East and West VP of sales have moved into these RVP roles. Greig DeBow moved from president of Small Town into an RVP role, and Vermont Cider Co. president Terry Hopper has moved into an East role as RVP.

HEINEKEN USA BRINGS GLOBAL BRANDS UNDER "FIVE POINTS" BANNER

Heineken USA has just announced the creation of Five Points Trading Company, "a new venture aimed at incubating some of our most popular global beers into the U.S.," per announcement.

The new Five Points brand roster -- Tiger, Red Stripe, Birra Moretti, Prestige, Sagres, Mort Subite, Affligem and Murphy's Irish Stout -- are already established in the U.S market, of course. Heineken is taking over as U.S. importer for the brands; the prior importing company contracts will expire at the end of this year. They will go with the established Heineken network, and be rolled out on a national and regional basis (brand dependent).

Five Points will be led by General Manager Chas Littlefield. He and his team are tasked with managing the brands separately from HEINEKEN USA's current portfolio.

‽Keeping the Five Point and HEINEKEN USA portfolios separate will allow our current marketing and sales organization to maintain focus on our four core brands - Heineken, Dos Equis, Tecate and Strongbow - while enabling Five Points to direct its energy and resources to developing the potential of these new to the company acquisitions," Chas said.

The outfit is named after the five points of HEINEKEN's iconic red star and America's first melting pot neighborhood in lower Manhattan.

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